A Delaware appeals court on Friday, December 19, ruled in favour of Elon Musk, clearing the way for him to receive a long-disputed $56 billion compensation package from Tesla.
The Delaware Supreme Court overturned earlier decisions by Chancellor Kathaleen McCormick of the Delaware Court of Chancery, who had previously invalidated the award, effectively reopening the path for the world’s richest man to collect the pay package.
In her 2024 rulings, McCormick had struck down the 2018 compensation plan, calling the approval process fundamentally flawed, and ordered the award to be rescinded despite it being approved by a majority of Tesla shareholders.
However, a five-judge appeals panel concluded that McCormick was wrong to void the package in its entirety.
“It is undisputed that Musk fully performed under the 2018 grant, and Tesla and its stockholders benefited from his performance,” the court said in its judgment.
The legal challenge stemmed from a lawsuit filed by Tesla shareholder Richard Tornetta, who argued that the compensation was excessive even though shareholders had approved it.
Following a five-day trial in January 2024, the Court of Chancery nullified the package, with McCormick stating that Tesla’s board was susceptible to Musk’s influence, describing him as a “paradigmatic superstar CEO.” She reaffirmed that stance in December 2024 after an initial appeal.
Throughout the legal dispute, Tesla’s board has consistently supported Musk. In August, directors approved an interim compensation award estimated at around $29 billion and later proposed a new pay plan valued at up to $1 trillion. On November 6, Tesla shareholders overwhelmingly endorsed the latest package, which is tied to specific performance and valuation benchmarks.
In a statement issued online on Friday, lawyers representing Tesla shareholders said they were reviewing the ruling and weighing their next steps.
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